At the World Economic Forum on Africa today, MasterCard announced its partnership with Premier Bank, becoming the first international payments network to enter Somalia.
As a result of the partnership, Premier Bank will now issue and accept the first MasterCard-branded payment cards in Somalia, a country which hasn't had any form of formal banking service since the collapse of the government and financial services system in 1991.
"Somalia has made significant strides to rebuild the country and instil peace and stability. Today marks a historic milestone, signalling Somalia's financial liberation following years of being excluded from participating in the global economy," says Abdirahman Yusuf Ali Aynte, the Minister of Planning and International Cooperation of Somalia.
Premier Bank ATMs can accept cards for cash withdrawal, while the bank will also issue 5,000 MasterCard debit cards this year, followed by prepaid cards, and point of sale (POS) machines.
The introduction of the MasterCard payments network means that government agencies now have an efficient platform through which to transfer salary disbursements. Foreigners, expatriates and international aid organisations sending funds to Somalia can do so via a formal, traceable network that complies with international security standards, eliminating the risks of transferring and transporting cash.
Remittances contribute well over US$1 billion to Somalia's economy annually, or over 35 percent of GDP, funds that are an essential source of income for individuals and necessary for the development of the country.
"Reassuring foreign investors, Somalis in the diaspora and those distributing aid that our financial systems are secure and properly regulated is critical to Somalia's economic well-being," he adds.
Premier Bank's MasterCard-branded debit cards enable Somalis to withdraw funds from any MasterCard-licensed ATM globally, shop online, and pay for goods and services at millions of merchants that accept MasterCard payment cards around the world.
"We can now provide our customers with a safe, cost-effective, convenient means of transacting, both at home and abroad," says Mahat Mohamed Ahmed, Managing Director of Premier Bank. "It is our hope that increasing payment card usage in Somalia will encourage merchants and citizens to demand more electronic payments services as they engage with and contribute to the formal economy."
Demonstrating the value of close collaboration in the banking and payments technology industries, this landmark partnership is a significant step towards reducing Somalia's dependence on cash, increasing financial inclusion and ultimately contributing to the country's financial stability.
"To promote economic growth in Somalia, which has long been isolated from the global economy, there is a need for electronic payment solutions that align with international security and regulation standards,'' says Daniel Monehin, Division President for sub-Saharan Africa, MasterCard.
"Our agreement with Premier Bank comes at a time when MasterCard is working closely with governments and financial institutions across Africa to introduce safe and simple financial solutions throughout Africa, achieving our vision of a world beyond cash," he says.